Oil recovers from three-month low as Norwegian strike provides some respite

Tokyo — Brent crude prices rose from a three-month low on Tuesday after more oil workers went on strike in Norway, supporting a market that has been dominated by oversupply issues in recent days.

Brent crude futures had climbed 28c, or 0.4%, to $72.12 a barrel by 3.31am GMT. They fell 4.6% on Monday, at one point touching their lowest since mid-April.

US West Texas Intermediate (WTI) futures were down 1c at $68.05. They fell 4.2% on Monday.

An oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.

The strike, which began last Tuesday, has had a limited effect on Norway’s oil production so far, but some drillers warned of possible contract cancellations if the dispute goes on for a month or more.

“The threat of further supply disruptions hasn’t totally evaporated,” ANZ said in a morning note.

ANZ also said that “production from Libya remains susceptible to further declines, despite its ports reopening”.

While Libyan ports were reopening, output at the Sharara oilfield was expected to fall by at least 160,000 barrels a day after two workers were abducted by an unknown group, the National Oil Corporation (NOC) said on Saturday.

On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at the El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 barrels a day Sharara was slashed.

US oil output from seven major shale formations was expected to rise by 143,000 barrels a day to a record 7.47-million barrels a day in August, the US Energy Information Administration said in a monthly report on Monday.

Production is expected to climb in all seven formations, with the largest gain of 73,000 barrels a day seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.

Reuters